Based in San Francisco, Exelixis (EXEL) is a drug company that is dedicated to the discovery, development and commercialization of new medicines for cancer treatment, asserts Mark Skousen, growth stock expert and editor of Five-Star Trader.

The compamy has three commercially available products: CABOMETYX, COMETRIQ and COTELLIC.  In January, the U.S. Food and Drug Administration (FDA) approved CABOMETYX for patients with hepatocellular carcinoma, the most common form of liver cancer and the fastest-rising cause of cancer-related death in the United States.

The firm has entered into partnerships with several leading pharmaceutical companies to deliver these breakthrough medicines to patients worldwide.

Its big-name collaborators, including Bristol-Myers Squibb (BMY) and Roche Holdings (RHHBY), are evaluating its drugs in more than 45 planned or ongoing clinical trials.

The goal is to make these treatments the principal choice for many other immunotherapy collaborations. And given the scarcity of active differentiated molecules in the biopharmaceutical industry, the CABOMETYX franchise is extremely valuable.

Exelixis just reported a strong first quarter, beating sales and earnings estimates. In fact, the company has beaten Wall Street’s consensus earnings estimate in each of the last five quarters.

Revenue, earnings and cash all continued to grow as the company executed its strategy to make CABOMETYX the leading tyrosine-kinase inhibitor (TKI) in renal cell carcinoma.

Plus, Exelixis is using its free cash flow to invest in additional clinical trials, boost internal discovery efforts and pursue new licensing opportunities.

Looking ahead, there are plenty of reasons for optimism. As CEO and President Mike Morrisey said in a recent conference call, “The foundation of our business has never been stronger and the prospect for future growth remains high in the face of widely anticipated competition.”

Exelixis is also an attractive takeover candidate. Big Pharma continually makes strategic acquisitions to acquire new drugs or promising drug candidates. Exelixis has both. And with a market cap of just $5.8 billion, even a mid-sized drug company would find it easy to acquire.

I expect Exelixis to earn $0.96 a share this year and more than $1.50 a share in 2020. But the company may well be bought out before we see next year’s earnings.

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